INDIA: Rise in textile export rebates unlikely to be agreed

A call by India's textiles minister for a higher rebate on duties paid on garment exports to the European Union (EU) will probably be refused by the country's finance ministry, industry representatives have told just-style.

Darshan Lal Sharma, a member of the Confederation of Indian Industry's (CII) National Committee on Textiles and a director of Vardhman Textiles, said it would be "really a challenge" to get an increased drawback approved when there was pressure to reduce the country's fiscal deficit.

Textiles minister K Sambasiva Rao last week proposed to increase the duty rebate rate by 5% for Indian apparel and textile exporters to compensate for losses due to Pakistan acquiring GSP Plus status, which will see many of its EU exports attract preferential import tariffs until 2017.

D K Nair, secretary-general of the Confederation of Indian Textile Industry (CITI), said Pakistan's zero duty status has made Indian garments less competitive by 9.6% and textiles by 5% to 6%.

"If some additional incentive could be given, this disparity can be reduced," he said, although he did not expect government action "any time soon".

The only option for Indian textile exporters is finalising the EU-India free trade agreement now under discussion, but this also would take time, Nair added.

Pprogress has been slowed by last year's German elections, the sluggish EU economy and upcoming elections in India. "These international agreements don't get finalised in such a situation."